Discounted cash flow analysis for real estate: Identifying best practice: A dissertation submitted in partial fulfilment of the requirements for the degree of Master of Property Studies at Lincoln University

Abstract

The Valuation of institutional grade real estate using discounted cash flow analysis has become increasing popular during the past fifteen years. The sophistication has increased, aided by computer technology and the development of spreadsheet applications. The sophistication of discounted cash flow models, which derive exact conclusions, can give a perception of precision which is unwarranted. The concern is that the precision is only implied. This research identifies the three key components of the discounted cash flow framework, which drive the conclusions, and uses four resource areas to determine how best these key components can be derived for maximum conclusion reliability and supportability.